February 23, 2010

Congressional Hearing on Toyota Recalls Began Today

Today was the first day of the Congressional hearings regarding the Toyota Safety Recalls, the session is being called, "Response by Toyota and NHTSA to Incidents of Sudden Unintended Acceleration." The representatives for Toyota did not actually respond today, that will happen tomorrow. Both men involved in the hearings, Akio Toyoda, the head of Toyota, and Jim Lentz, Toyota Motor Sales USA President, will address three separate topics: "Toyota's basic philosophy regarding quality control, the cause of the recalls, and how we will manage quality control going forward."

The Toyota spokesmen are also going to reiterate that the unintended acceleration issue is NOT caused by electronic problems. Lentz and Toyoda have released their prepared testimony, but will also have a chance to answer questions tomorrow. Our team at Checkered Flag Toyota is working now to update recalled Toyota vehicles. If you have any questions regarding the recalls, please visit our Toyota Recall Information page, or call the Recall Hotline 757-481-8888. I'll keep you posted with any new information as it becomes available.

I am Akio Toyoda of Toyota Motor Corporation. I would first like to state that I love cars asmuch as anyone, and I love Toyota as much as anyone. I take the utmost pleasure in offeringvehicles that our customers love, and I know that Toyota's 200,000 team members, dealers, andsuppliers across America feel the same way. However, in the past few months, our customershave started to feel uncertain about the safety of Toyota's vehicles, and I take full responsibilityfor that. Today, I would like to explain to the American people, as well as our customers in theU.S. and around the world, how seriously Toyota takes the quality and safety of its vehicles. Iwould like to express my appreciation to Chairman Towns and Ranking Member Issa, as well asthe members of the House Oversight and Government Reform Committee, for giving me thisopportunity to express my thoughts today.

I would like to focus my comments on three topics - Toyota's basic philosophy regarding qualitycontrol, the cause of the recalls, and how we will manage quality control going forward.First, I want to discuss the philosophy of Toyota's quality control. I myself, as well as Toyota,am not perfect. At times, we do find defects. But in such situations, we always stop, strive tounderstand the problem, and make changes to improve further. In the name of the company, itslong-standing tradition and pride, we never run away from our problems or pretend we don'tnotice them. By making continuous improvements, we aim to continue offering even betterproducts for society. That is the core value we have kept closest to our hearts since the foundingdays of the company.

At Toyota, we believe the key to making quality products is to develop quality people. Eachemployee thinks about what he or she should do, continuously making improvements, and bydoing so, makes even better cars. We have been actively engaged in developing people whoshare and can execute on this core value. It has been over 50 years since we began selling in thisgreat country, and over 25 years since we started production here. And in the process, we havebeen able to share this core value with the 200,000 people at Toyota operations, dealers, andsuppliers in this country. That is what I am most proud of.

Second, I would like to discuss what caused the recall issues we are facing now. Toyota has, forthe past few years, been expanding its business rapidly. Quite frankly, I fear the pace at whichwe have grown may have been too quick. I would like to point out here that Toyota's priorityhas traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These

priorities became confused, and we were not able to stop, think, and make improvements asmuch as we were able to before, and our basic stance to listen to customers' voices to makebetter products has weakened somewhat. We pursued growth over the speed at which we wereable to develop our people and our organization, and we should sincerely be mindful of that. Iregret that this has resulted in the safety issues described in the recalls we face today, and I amdeeply sorry for any accidents that Toyota drivers have experienced.

Especially, I would like to extend my condolences to the members of the Saylor family, for theaccident in San Diego. I would like to send my prayers again, and I will do everything in mypower to ensure that such a tragedy never happens again.

Since last June, when I first took office, I have personally placed the highest priority onimproving quality over quantity, and I have shared that direction with our stakeholders. As youwell know, I am the grandson of the founder, and all the Toyota vehicles bear my name. For me,when the cars are damaged, it is as though I am as well. I, more than anyone, wish for Toyota'scars to be safe, and for our customers to feel safe when they use our vehicles. Under myleadership, I would like to reaffirm our values of placing safety and quality the highest on our listof priorities, which we have held to firmly from the time we were founded. I will also strive todevise a system in which we can surely execute what we value.

Third, I would like to discuss how we plan to manage quality control as we go forward. Up tonow, any decisions on conducting recalls have been made by the Customer Quality EngineeringDivision at Toyota Motor Corporation in Japan. This division confirms whether there aretechnical problems and makes a decision on the necessity of a recall. However, reflecting on theissues today, what we lacked was the customers' perspective.

To make improvements on this, we will make the following changes to the recall decision-making process. When recall decisions are made, a step will be added in the process to ensurethat management will make a responsible decision from the perspective of "customer safetyfirst." To do that, we will devise a system in which customers' voices around the world willreach our management in a timely manner, and also a system in which each region will be able tomake decisions as necessary. Further, we will form a quality advisory group composed ofrespected outside experts from North America and around the world to ensure that we do notmake a misguided decision. Finally, we will invest heavily in quality in the U.S., through theestablishment of an Automotive Center of Quality Excellence, the introduction of a new position- Product Safety Executive, and the sharing of more information and responsibility within thecompany for product quality decisions, including defects and recalls.

Even more importantly, I will ensure that members of the management team actually drive thecars, and that they check for themselves where the problem lies as well as its severity. I myselfam a trained test driver. As a professional, I am able to check on problems in a car, and canunderstand how severe the safety concern is in a car. I drove the vehicles in the accelerator pedalrecall as well as the Prius, comparing the vehicles before and after the remedy in variousenvironmental settings. I believe that only by examining the problems on-site, can one makedecisions from the customer perspective. One cannot rely on reports or data in a meeting room.

Through the measures I have just discussed, and with whatever results we obtain from theinvestigations we are conducting in cooperation with NHTSA, I intend to further improve on thequality of Toyota vehicles and fulfill our principle of putting the customer first.My name is on every car. You have my personal commitment that Toyota will work vigorouslyand unceasingly to restore the trust of our customers.

PREPARED TESTIMONY OF YOSHIMI INABA PRESIDENT AND COO, TOYOTA MOTOR NORTH AMERICA (TMA) AND CHAIRMAN AND CEO OF TOYOTA MOTOR SALES

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM FEBRUARY 24, 2010

Chairman Towns, Ranking Member Issa, members of the Committee, thank you for inviting me to testify today. My name is Yoshimi Inaba, and I am the President and COO of Toyota Motor North America and Chairman and CEO of Toyota Motor Sales, U.S.A., Inc.As you heard today from Toyota President Akio Toyoda, and as the Subcommittee on Oversight and Investigations heard yesterday from Jim Lentz, President and Chief Operating Officer of Toyota Motor Sales, U.S.A., Toyota is taking decisive steps to restore the trust of the tens of millions of Americans who purchase and drive our vehicles.

Our 172,000 team members and dealers across North America are making extraordinary efforts to complete our current recalls as quickly and conveniently as possible. We have rigorously tested our solutions and are confident that with these repairs, Toyota vehicles will remain among the safest on the road today. We are also going further, by installing advanced brake override systems in all of our new North American vehicles before the end of 2010 and in an expanded range of existing models as a customer confidence measure, and taking comprehensive steps to ensure strict quality control and increased responsiveness to our customers and regulators in the future.

As you have heard, Mr. Toyoda is leading a top to bottom review of our global quality control processes, and will seek input from independent safety experts to ensure that our processes meet or exceed industry standards. As head of Toyota's North American operations, I will be closely involved in this review. Working with our new Chief Quality Officer for North America, I also will take responsibility for ensuring that we improve our dialogue with U.S. safety regulators and that we take prompt action on any issues we identify to ensure the safety of American drivers.

Our recent recalls address five separate issues that we have identified with certain Toyota vehicles. In total, some 5.3 million vehicles across 14 models are affected by one or more of these recalls in the United States.

The biggest recalls are for solutions our engineers have developed with regard to two specific mechanical causes of unintended acceleration. One involves all-weather or inappropriate accessory floor mats that when loose or improperly fitted can entrap the accelerator pedal. The other concerns accelerator pedals that can, over time, grow "sticky" with wear in rare instances. The solutions we have developed for both these issues are effective and durable.

With respect to possible accelerator pedal entrapment by the floor mats, Toyota recently designed a vehicle-based change that directly addresses the problem and announced the solution to the public in November 2009 as part of the safety campaign announced on September 29, 2009. Owners of affected vehicles can, in the meantime, drive safely by ensuring that they use only properly secured, appropriate floor mats.

With respect to sticking accelerator pedals, Toyota announced a safety recall in the United States in January to address this issue. The sticking condition does not occur suddenly and if it does, the vehicle can be controlled with firm and steady application of the brakes. We are confident that vehicles whose drivers are not experiencing any issues with their accelerator pedal are safe to drive, and Toyota dealers are rapidly completing the repairs on our customers' vehicles.In both of these cases, Toyota thoroughly and carefully evaluated the technical aspects of these issues. However, we now understand that we must think more from a customer first perspective rather than a technical perspective in investigating complaints, and that we must communicate faster, better and more effectively with our customers and our regulators. Our recent, smaller voluntary recalls of certain 2010 Prius and Lexus HS hybrids for a software update to the braking system, certain 2010 Camry cars to inspect a power steering hose, and certain 2010 Tacoma trucks to inspect the front drive shaft all illustrate this new approach.

Chairman Towns, Ranking Member Issa and members of the Committee, I assure you that nothing matters more to Toyota than the safety and reliability of the vehicles our customers drive. We are committed not only to fixing vehicles on the road and ensuring they are safe, but to making our new vehicles better and even more reliable through a redoubled focus on putting our customers first.